The country's leading listed non-banking financial institutions (NBFIs) have reported higher profit in the nine months for January-September 2021 compared to the same period of last year.
Market insiders said earnings per share (EPS) of most of the NBFIs increased thanks to lower cost of funds, relaxed loan classification and capital gains through investment in stock market.
The EPS of eight companies soared, three saw slight decline while one continued to incur losses, of the 12 NBFIs which published un-audited consolidated financial reports for January-September, 2021 as of Sunday.
The companies whose EPS increased are Prime Finance & Investment, Bay Leasing & Investment, Bangladesh Finance, LankaBangla Finance, Delta Brac Housing Finance Corporation, United Finance, IPDC Finance and GSP Finance.
Islamic Finance, IDLC Finance and National Housing Finance saw their EPS fall marginally while Union Capital remained in losses during the period under review, according to Dhaka Stock Exchange (DSE) data.
The EPS is the portion of a company's profit allocated to each outstanding share of common stock. In short, it serves as an indicator of a company's profitability.
Bangladesh Finance has informed that its EPS increased due to reduction of cost of deposit and borrowings, realised capital gain from investment in share and increase in brokerage commission compared to the same period of previous year.
The capital market is a major source of income for the financial institutions and some NBFIs have registered substantial capital gains from investment in shares as the market was bullish during the period under review, said a merchant banker.
DSEX, the prime index of the DSE, jumped by 1927 points or 36 per cent in the first nine months during the January-September period of 2021, according to DSE data.
Delta Brac Housing Finance has reported 49 per cent growth year-on-year in EPS for January-September 2021.
"Significant decline of cost of fund and gain from capital market investment have contributed most for such upsurge of EPS during the period," said the company.
It's net interest income increased by 16 per cent due mainly to decrease of cost of fund, according to the company.
The company's investment income was Tk 102.21 million up to September 2021 as against Tk 5.9 million of September 2020.
The company also earned Tk 40.75 million (43 per cent) more from fees and charges during the first nine months of the current year over the same period of the last year, it added.
LankaBangla Finance's EPS has been soared by 89 per cent mainly because of surge in net investment income of Tk 864.18 million from capital market, increase in brokerage and underwriting commission of Tk 707.94 million and raise in the operational income of Tk 193.51 million offset by noteworthy increase in provisions and suspense for lease, loans and advances (Tk 1,339.20 million).
Prime Finance's EPS jumped significantly due mainly to sale of its land. The company sold 8.57 katha land located at 10 Panthapath at a net value of Tk 360.48 million. On the other hand, loan/lease provision has been increased due to implementation of Bangladesh Bank classification circular dated July 26, 2021, said the company.
The stock market was bullish while the NBFIs did not require keeping provision amid the suspension of loan classification, ultimately boosting profits of the companies, said an analyst at a leading brokerage firm.
He, however, said the unaudited EPS often does not reflect the actual financial health of a firm, but indicates the profitability that influences investors towards their long-term investment.
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